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CrowdStrike Rises 5.56%: Strong Momentum and Long-term Growth Potential Indicate Buy Signal

StockInvest.us, 3 weeks ago

CrowdStrike Technical Analysis

CrowdStrike Holdings, Inc. (CRWD) closed on October 10, 2024, at $314.92, representing an impressive 5.56% increase from the previous day. The stock experienced price fluctuations between $297.29 and $315.52 during the day, and is currently operating near its immediate resistance level of $343.05. Over the past 50 days, the stock has trended upward, with its moving average sitting at $264.01, while the 200-day moving average remains lower at $305.51, indicating a bullish momentum.

The Relative Strength Index (RSI14) at 59 suggests that the stock is neither overbought nor oversold, but leans toward the higher end of the neutral zone, supporting the positive momentum. The Moving Average Convergence Divergence (MACD) at 12.06 further confirms bullish momentum. The Average True Range (ATR), a measure of volatility, stands at 3.20, reflecting adequate activity for potential swing trades.

Fundamental Analysis

Fundamentally, CrowdStrike is positioned well with a robust market capitalization of $77.20 billion. However, its price-to-earnings (P/E) ratio of 449.89 might appear overvalued relative to traditional benchmarks, but is typical within high-growth tech sectors, reflecting high market expectations. The Earnings Per Share (EPS) of 0.70 remains modest but is consistent with growth-oriented strategies. With a discounted cash flow (DCF) valuation of approximately $378.18, the stock appears undervalued relative to intrinsic valuation models, suggesting significant potential for upside.

The recent outage that affected Delta earnings demonstrates the key role CrowdStrike's services play in enterprise operations, although it also highlights potential vulnerabilities that can impact client trust and revenue stability. That said, recent analyst endorsements and acknowledgment of a successful recovery indicate favorable market and investor perception.

CrowdStrike Short-term Outlook

For the next trading day and the upcoming week, the positive momentum supported by strong technical indicators and bullish market perception could see CRWD testing resistances. However, if it fails to break resistance at $343.05, a pullback towards the support level of $304.96 could occur. Traders should be mindful of potential volatility driven by broader market conditions or sector-related news.

Intrinsic Value and Long-term Investment Potential

CrowdStrike's DCF valuation suggests that the stock is currently undervalued, implying future intrinsic value appreciation as the cybersecurity landscape continues to expand. The strategic positioning in a burgeoning industry, coupled with consistent analyst consensus towards a 'Buy' outlook, reflects long-term growth potential. The advancement in cloud security and enterprise mobility positions the company strategically to capitalize on rising cybersecurity threats.

Overall Evaluation

Based on current technical momentum, favorable fundamental analysis, and industry growth prospects, CrowdStrike Holdings is positioned as a 'Buy' candidate. This conclusion is backed by the stock's bullish trend, analyst confidence, and potential intrinsic undervaluation, despite recent operational challenges. Investors should remain observant of market dynamics and potential risks associated with high P/E valuation inherent in growth stocks.

Check full CrowdStrike forecast and analysis here.